There’s a solution to this

Four out of 10 council homes sold under Margaret Thatcher’s flagship right-to-buy policy are now in the hands of private landlords, with their tenants paying more than twice the rent levels charged by local authorities.

Raise council rents to market rates.

Yes, this will mean the housing benefit bill rises, at least to start with. But then we should see the true cost of housing policy, shouldn’t have substantial parts of it off hidden in opportunity costs.

Just to clarify. If we can get £x in rent from a property, but only charge £x/2 for it, then £1/2x is a cost of our housing policy. It’s not obvious, not in the open, but it’s still a cost. Better by far to have all costs open so that we can at least consider them.

12 comments on “There’s a solution to this

  1. Easier solution- give the tenant’s of social housing their homes.

    Social properties are valued in accordance with the cashflow from rents. All the present system does is tax people, to pay for benefits to pay the income on properties that are only “worth” those payments.

    The market value we should be talking about is the market value of those social properties, which should be handed over to the tenants, and everyone benefits.

  2. Tim’s pointed out the obviously best economic approach (it’s not a solution). But like the corp tax turkey plucking thing vs tax incidence a hidden cost is the best type of cost for politicians. The shock of the sudden reveal of a significant hidden cost like that of social housing will just be a haddock that the politician who does the uncovering and their party will be beaten to death with by other politicians.

  3. “Easier solution- give the tenant’s of social housing their homes.”

    Living in social housing should be a temporary stage in life, not a lifestyle choice. If we give existing social housing to the current tenants, we will have to build more to meet demand. And if we continue to give the houses away, we’ll end up giving everyone a ‘free’ house.

  4. The UK housing market is broken – official.
    A well-balanced account of current thinking on the subject can be found at, of all places, the Daily Mail online with the headline
    As UK land value hits 5 trillion pounds calls for a new tax rise

  5. In the early 2000s it was core Labour housing policy to align social housing rent with market rent. The dual prongs were that it would make housing costs open and transparent, and it would put the housing revenue account on a proper prices-pay-costs financial footing.

  6. One thing that struck me about social housing (housing associations) was the accounting based on booking the present value as the original build cost.

    I looked at one local housing association and was surprised to find their housing stock valued at an arithmetic average of £8K a piece (ca. 350 properties).

    I think I can see why all those CEOs of “not for profit” and “community interest companies” award themselves such bulging remuneration packages.

  7. Theophrastus said:
    “Living in social housing should be a temporary stage in life, not a lifestyle choice.”

    Maybe should be, but they have life tenancies.

    The tenants already have the benefit of cheap housing. The solutions are either (as Tim says) to jack up the rent to market levels (which transfers the benefit from the tenants to the housing association) or give the houses to the tenants (which doesn’t change the benefit, since the tenants already have a life tenancy (there’s a small transfer to the tenants, but only of the residual value of the property when they die, which is low unless they’re very elderly)).

  8. Richard

    Lifetime tenancies are being phased out. The Localism Act 2011 introduced a power for local authorities to offer “flexible tenancies” to new social tenants after 1 April 2012. Previously, housing associations were required to offer tenants the “most secure” form of tenancy, so the majority of tenants – but by no means all – were offered lifetime assured tenancies.

    Giving a public asset away for free is not prudent and will only increase electoral demands for more social housing. Tim’s suggestion of market rents is the way to go, even if it inflates the HB bill.

  9. Right to buy is 30+ years old. How many people live in the same house for 30+ years?
    I’ve been in my ex council house for 19 years and I am probably the 5th person to buy it.

    What really irks the guardian is that some people can buy a house and rent it out.
    Ex council house when you buy it from a private owner is not an ex council house. Its a house.

    However if they changed the story to the fact that landlords own some houses its not as interesting is it?

  10. @ Martin
    My grandmother; so did my parents; my sisters are heading that way and my wife intends to live in this one for thirty years (not sure I’ll live that long). Several of my friends but yes, it is now a very small minority – in our street only two houses have stayed in the same hands since we arrived in 1996

    Where the Grauniad’s story strikes a chord is that an above-average proportion of houses that were built to be rented are being rented because they don’t suit the typical owner-occupier who wants to modify the house to suit his/her changing needs as he/she ages and acquires/loses a family.

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